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    Valorem is a leading independent renewable energy development and operating company. It is one of the largest onshore wind developers in France, having developed over 480MW of capacity over the last 10 years.

    The French power market is experiencing a major transition as it looks to reduce its reliance on nuclear generation and to increase generation from renewable sources of energy such as wind and solar. The energy transition has been continuously supported by the French governments over the past decade. With in-house capabilities across the entire project cycle and a strong local footprint, Valorem is well positioned to benefit from this shift in energy mix.

    Developments in the year

    Valorem’s performance continues to be driven by the expansion of its asset base in an attractive and growing market. During the year, 92MW of generating capacity entered into construction, which will lead to a total capacity of 340MW. The pipeline of both wind and solar projects is developing faster than in our investment case. Earnings from electricity generation grew strongly during the year.

    The political environment in France continues to be supportive, with an official Government objective to more than double renewable electricity generation capacity in 10 years and specific support for increasing solar capacity.

    French wind farm tariffs are demonstrating resilience, due to reduced competition in recent auctions. Valorem’s current portfolio (operational and under construction) is relatively young, with an average residual life of the power purchase agreement of approximately 12 years.

    The Finnish wind and French hydro pipelines are also maturing in a supportive market environment.

    Regulatory and political environment

    Renewables benefit from strong support from the French Government, which has an objective of a 32% renewables contribution by 2032 coupled with a carbonneutral electricity mix by 2040. In line with the need to triple the current installed PV capacity by 2023, in December 2017 the Government announced an increase of future PV auctions from 1.45GW to 2.45GW per annum over the next three years.

    Investment rationale

    This investment diversifies the Company’s portfolio with exposure to a growing renewables business in one of the most attractive European markets, and access to recurring, inflation-linked cash flows underpinned by a robust regulatory regime.

    Led by its experienced management team, Valorem is a best-in-class developer, being the fourth largest French wind developer and the largest independent one. It has a significant pipeline of projects at an advanced stage of development that it expects to convert into operating assets, with further projects at earlier stages to bring through the development process.

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